6 Ways to Protect Your Teens from Bad Credit

If you have teenagers, you probably already know their spending habits can be questionable at times. If they have an after-school job or money from doing chores, they are probably more likely to spend it rather than save it.

As a parent, it’s up to us to teach our kids good financial habits. This is particularly true when it comes to credit.

If we start teaching them early, we can protect our teens from bad credit and give them a boost toward a strong financial future.

Here are some easy ways to protect teens from bad credit:

1. Help them open and maintain a checking account.

This is one of the best ways to teach your teen about finances. Show them how to balance a checking account and how to only spend what they have in their account.

After they’ve mastered this, then you can begin talking about a credit card.

2. Be sure they know how credit works.

Many adults find it difficult to understand the ins and outs of credit, and it’s even harder for most teens.

Teach them about credit scores, how to use credit responsibly and the effects of interest on their debts.

3. Don’t allow them to have their own credit card.

I suggest not allowing your teens to have their own credit card until they’ve shown they can use it responsibly.

This can be difficult because many teens who earn their own money receive offers to apply for a credit card. Instead, consider giving them a credit card on one of your accounts so you can closely monitor their spending habits.

Make sure they pay you when the bill is due, including any interest accrued.

4. Monitor your teen’s credit report to prevent identity theft.

Teens are especially vulnerable to identity theft because they rarely keep track of credit scores or even bank accounts.

If an identity thief is able to access critical information, they can open credit cards in your teen’s name that have the potential of ruining their credit.

5. Teach your teen to protect their financial information.

This obviously goes hand in hand with the previous tip.

Tell them to avoid giving their social security number online. Also warn against websites that ask for any personal information, as this can be used to guess secret answers and gain access to bank accounts.

6. Teach them good spending and saving habits.

The best way to protect teens from bad credit is to demonstrate it yourself.

Talk with them about your finances and how you manage them. By starting at an early age and showing your teen how to save, spend only what they have and pay off their debts, you are giving them the gift of a strong financial foundation.

Mike Randall is most knowledgeable in the areas of credit scores and credit cards, having written on those topics and others for the past eight years. He graduated from California State University with a degree in English literature, and he has an extensive background in personal finance studies. When he's not keeping BadCredit.org readers informed of changes in the subprime market, Mike’s hobbies include sailing and gourmet cooking.

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